The losers

I believe the SEC did a study back in the 90's. I saw the results once but don't recall the exact figure. I'm wanting to say it was 80% - 90% but I'll be the first to admit my memory is not what it used to be.

If I'm not mistaken some years ago a well known brokerage firm did a similar study,
I don't remember who it was.
 
Quote from LeonPhelps:

Curious choice of words and phrases...
More...

Thank goodness I didn't mention "blowing your wad" because you didn't "puke your position." that you were "taking it up the ass" on. :)
 
I once posted some stats from the SEC and NASD compiled from the trading records of day trading firms in the 90s. The wording was so convoluted it was hard to understand, but it seemed to say that "most fail".

Anybody who just flatly says "X% of traders fail" is probably just talking out thier ass. I blew out an account once due to trading losses. So does that mean I failed? You could say that if you want to, but a few months later I saved the wages from my job and started trading again. I did fair to middlin and then I blew the transmission in my car. So I took most of the money out of my trading account to pay for it, does that mean I failed? Again, you could say that and I probably wouldn't argue too much. Sometime again later, and again with money earned from wages as an employee, I started trading again. And after 12 months I had spectacular triple digit gains. Does that mean I'm one of the 5, 10 or 20% elite who are considered a success? Well, maybe. But then a few months later I was a defendant in criminal proceedings, (not trading related!), and I needed the money out of my account yet again to defend myself. So once agian my trading account is down to, literally, $0.45. I'll be back in the game in about a month, let's see how long I can keep it going this time and see which side of the statistics I end up on.
 
The number of winners vs losers is only one figure to look at... the more important question is... how much the winners win vs how much the losers lose...

If you look at the number of winners vs losers... I think the 80/20 rule might apply. However, being the elite 20% doesn't mean you're gonna clean up... In fact, a LOT of the 20% "winning traders" might only be slightly above breakeven.

This relationship is non-linear and the actual distribution might resemble the market itself with fat tail meaning that a very small number of traders are making obscene amount of money...

This is exactly why trading is so hard... imagine if the market is a gigantic puzzle for traders to solve...

- Solving 50% of the puzzle doesn't mean you're breakeven... it means you wipe out in no time... Knowing half of what the market is about doesn't do you any good than knowing nothing. This is exactly why trading is so frustrating. You don't see any financial progress at all even though your market knowledge is growing at frantic pace and you know so much more than the layman.

- Solving 70% of the puzzle doesn't mean you're getting any better financially. In fact you're still losing money (although losing less) even though you know so much more than before...

- Solving 80% of the puzzle doesn't make you an 'A' student of the market, you just breakeven and starting to become a "winning trader"

- Solving 90% of the puzzle you start to have a regular income of some sort

- Solving 95% you start to have a respectable income

- Solving 98% you start to make some serious money

- Solving 99% you're talking about 7 figures, even 8 figures with time...

The remaining 1% would make all the difference in the world... it's the difference between 7 figures and Bruce Kovner, Steve Cohen or Jim Simons with 9, 10, 11 figures... even within this 1% the distribution has fat tail distribution of its own... a handful of players are making unbelievable amount of money...

The implication of the above is that the odds of trading success is a lot slimmer than most people think.

Most people think all they need to do is to become the "top 20%"... which is hard but still doable in many's mind...

The true odds is that being the top 20% doesn't mean money pouring in... at all... you might be a "winning trader", but the SIZE of your winning isn't what you've expected... you need to be the top 5% to even have an OK income... and probably to become the top 2% to make some serious money... to make millions we're probably talking about the 1% range...

Imagine, those who think all they need to do is to beat 4 guys out of 5 (top 20%) to make millions... their estimates are probably 20 times off (top 1%) the true odds... (ever wonder why the number of millionaries isn't 1 out of 5, but rather more like 1 out of 100?)

For those who think they only need to be above average (50%) to make some money, they're actually down the sure road of being wiped out...
 
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